Over the decades, the perception of cooperatives has revolved from that of considering them as food security agents and determinants to that of social and economic agents to cooperators, community, and national development. The study, therefore, critically reviewed the related literature on agriculture cooperatives as poverty alleviating agents. An integrated strategy in the research review approach was used to support the study. The findings revealed recent developments in cooperatives that are putting agriculture cooperatives on the map as agents of poverty eradication and social and economic development in third-world countries. Currently, there is a societal expectation that cooperatives have not only a responsibility to better the lives of the members but also the entire community and nation as a whole. The study concluded that achieving future sustainable social and economic development requires full recognition of all the key economic players in the business ecosystem. The study, therefore, recommends full support of the agriculture cooperatives if they are to play a positive and integral role in mitigating the poverty levels in third-world countries.

1. Texila International Journal of Management
ISSN: 2520-310X
DOI: 10.21522/TIJMG.2015.07.02.Art014
*Corresponding Author: adsikalumbi@gmail.com
Critical Literature Review on Agriculture Co-Operatives in Developing
Countries: A Poverty Mitigation Perspective
Sikalumbi Arona Dewin1*
, Victor Muchemwa2
1
Faculty member, Chalimbana University - Lusaka, Zambia
2
University of Zambia - IDE Lusaka, Zambia
Abstract
Over the decades, the perception of cooperatives has revolved from that of considering them as food
security agents and determinants to that of social and economic agents to cooperators, community, and
national development. The study, therefore, critically reviewed the related literature on agriculture
cooperatives as poverty alleviating agents. An integrated strategy in the research review approach was
used to support the study. The findings revealed recent developments in cooperatives that are putting
agriculture cooperatives on the map as agents of poverty eradication and social and economic
development in third-world countries. Currently, there is a societal expectation that cooperatives have
not only a responsibility to better the lives of the members but also the entire community and nation as
a whole. The study concluded that achieving future sustainable social and economic development
requires full recognition of all the key economic players in the business ecosystem. The study, therefore,
recommends full support of the agriculture cooperatives if they are to play a positive and integral role
in mitigating the poverty levels in third-world countries.
Keywords: Agriculture, Cooperative, Entrepreneurship, Development, Poverty.
Introduction
Zambia has a substantial number of
cooperatives in the agriculture sector, account
for 96.1% of the total cooperatives in the country
[1]. Agriculture and agro-businesses are
considered the most lucrative or profitable with
potential for growth [2]. Therefore, cooperatives
in the agriculture sector are largely regarded as
solutions to poverty reduction, improved
livelihood through food security, and directly
help to address high poverty levels in rural areas
[3].
Cooperatives have individual member
benefits, community benefits as well as national
benefits. These are well-organized entities that
reach the neglected populations and act as
alternatives to inclusive growth with the
potential to create jobs and improve income
levels [4]. They would adopt a system that
promotes and supports member-controlled
economic associations based on self-help
through group initiatives. Cooperatives carry a
shared responsibility approach, and thus each
member gets a sense of ownership. To achieve
their goal, members of cooperatives pull
together their ideas, skills, and resources; they
also cover up for the weaknesses of the
member/s through capitalizing on the strengths
of other members. Membership is open as long
as one desires to join. Cooperatives can also seek
or receive assistance from the State and NGOs
[5].
International Labour Organization [6] defines
a cooperative as an autonomous association of
persons united voluntarily to meet their common
economic, social, and cultural needs and
aspirations through a democratically controlled
and jointly owned enterprise. Put another way,
and agricultural cooperatives pool production
and resources of farmers and rural entrepreneurs
in order to maximize the benefits for its
1

2. members. Centrally to corporations,
cooperatives focus on service rather than profit.
Although members receive payment for their
capital contributions, it is not linked to the
profitability of the cooperative; rather, it is
usually held at a fixed interest rate that can be
tied, by law, to a maximum permitted rate.
Cooperatives cannot be foreign to the African
continent. Way back before the advent of
colonialism, savings associations known by
different names could be found on the continent.
Examples include; sanduk in Sudan, esusu in
Nigeria, ekub in Ethiopia, and chilimba (now
called village banking) in Zambia. Usually, all of
these consisted of a simple organizational
structure where savings and credit were
administered on a rotation basis by members.
These associations convened in fixed intervals
(weekly, fortnight, monthly), and each of the
members would contribute a fixed amount. The
whole amount collected would then be given out
to one member according to the criteria agreed
upon by all the members.
Presently, developing countries has several
types of cooperatives stretching from
agricultural, consumer, and housing to worker-
based cooperatives. All these are managed by
executive committees and have been subjected
to many politics in most of these countries. The
strategies of the cooperatives are seen as
essential to the regeneration of many of the
region’s economies where adverse trade terms,
foreign debt, and civil war or tribal conflicts, and
rivalry have created social economic and
displacements [7]. It is observed that quite a
number of the cooperative societies and unions
have stopped to exist or become inactive with the
marketing liberalization, which was largely
driven under the structural adjustment
programmes of the World Bank. Besides,
another main feature of the cooperative
association in developing countries like Africa is
the control instituted by some of the
governments that deny them the flexibility to
respond to the market forces as is enjoyed by
their private-sector competitors.
Formal cooperatives were first introduced in
sub-Saharan Africa by the colonial governments,
often for promoting the production of cash crops
by peasant farmers. After independence, many
Sub-Sahara African governments adopted
policies that further accentuated the role of
cooperatives and other rural organizations in the
agriculture sector. These became significant
channels for government-sponsored credit input
supply and marketing programs and usually had
to operate under close guidance and control by
the state.
Studies by World Bank show that past efforts
by governments to promote efficient and
sustainable growth of the cooperatives were
constrained by inappropriate policies. Extensive
government intervention tended to reduce
member participation and militated against the
objective of building self-sustaining
organisations. Regulations of prices and markets
frequently prevented rural organizations from
becoming commercially and financially viable.
A World Bank Operations and Evaluation
Department (OEP) report covering the period
1965 to 1986 stated that agriculture projects,
including group participation, often did not work
because the groups were not committed to the
project and acted more as an extension of the
government than as organizations representing
beneficiaries [8].
Currently, many cooperatives the world over
are free (independent from the government) to
diversify and exploit the existing business
opportunities not only for survival and increase
individual benefits but also to contribute to
social and economic development.
This study aimed at reviewing the related
literature on agriculture cooperatives as a
poverty mitigation measure.
Problem Statement
According to the International Labour
Organisation, it observed that the voices of
association of people united voluntarily to
cooperatives and the cooperative movement to
meet their common social, economic, and
2

3. cultural aspirations are relatively not heard
enough, as evidenced in the omission of
cooperatives representation in 2012 SDGs
evaluation at the United Nations Conference [6].
One potential reason for the invisibility of the
cooperative option in the debate is a lack of
understanding of the actual and potential
contribution of cooperatives to sustainable
development and poverty eradication, partly due
to the unequal nature of literature on this subject.
This article, therefore, endeavours to reduce the
existing literature gap.
Research Objectives
The study was guide by the following
objectives;
1. Establish the economic contributions of the
agriculture cooperatives.
2. Analyse the role of the cooperative societies
in mitigating the poverty levels in
developing nations.
3. Determine the role of foreign investment in
enhancing the cooperative performance in
developing nations.
Methodology
The study undertook a critical review of the
related literature on entrepreneurial agriculture
cooperatives as poverty alleviating agents.
Literature review methodology is basically
anchored on three broad strategies. These are
systematic, semi-systematic, and integrative
strategies. Summarized in Table 1 are the three
strategies in the literature review.
Table 1. Literature Review Approaches
Approach Systematic Semi-systematic Integrative
Typical purpose To synthesize and
compare evidence
Gives an overview of research area
and track development over time
Critique and
synthesize literature
Research questions Specific Broad Narrow or broad
Search strategy Very systematic May or may not be systematic Usually not
systematic
Sample
characteristics
Quantitative
articles
Research articles Research articles,
books, and other
published texts
Analysis and
evaluation
Quantitative Qualitative/quantitative Qualitative
Examples of
contribution
Evidence of effect
inform policy and
practice
State of knowledge is in
themes in literature, historical
overview, research agenda and the
theoretical model
Taxonomy or
classification, and
theoretical model or
framework
Source: Adapted from Hannah Snyder (2019).
Under the right circumstances, all of these
review strategies can be of substantial help to
answer a specific research question. However, it
is credible to note that there are several other
forms of literature reviews, and features from
different approaches are often combined. These
approaches are quite wide, and it is essential to
note that they might require further adaptation
for a particular research project [7].
In this particular study, the integrative
strategy was used to give the study some
flexibility to accommodate some literature away
from the articles.
The descriptive research design was used to
describe the existing literature on agriculture
cooperatives as a poverty-mitigating sector of
the economy. The study revealed recent
developments in cooperatives that are putting
3

4. agriculture cooperatives on the map as agents of
poverty eradication and social and economic
development in many third-world countries.
Although there is scanty literature on the
impact of the agriculture cooperatives on
poverty eradication, a few related pieces of
literatures were reviewed using document
analysis. Research articles, books, and other
published texts by the World Cooperative
Monitor reports, International Co-operative
Alliance, OECD, ILO, UNDP Annual Report,
USDA, and the Ministry of Commerce, Trade
and Industry documents were some of the main
documents reviewed in this study using
purposive and random sampling techniques.
Statistics of the Cooperatives
World Statistics of the Cooperatives
World over, there are over 2.9 million
cooperative societies, and this employs over
10% of the global employed population. Asia as
a continent has the highest number of
cooperatives, followed by Africa. However,
Africa has the lowest number of employees
despite having the highest number of
cooperatives. This indicates that African
cooperatives have relatively low worker member
employees and relatively more producer
members, as presented in Table 2.
Table 2. World Statistics of the Cooperatives
No Of
Coop
Cooperative Employment Total
Employmen
t (A+B+C)
User-
Members
(D)
Total
Members
(B+C+D)
Employees Worker-
Members
(B)
Producer-
Members
(C)
Europe (37) 221,960 4,710,595 1,554,687 9,157,350 15,422,632 152,064,608 162,776,645
Africa (35) 375,375 1,939,836 37,836 20,410,298 22,387,970 33,638,298 54,086,432
Asia (33) 2,156,219 7,426,760 8,573,775 219,247,186 235,247,721 320,130,233 547,951,194
America
(39)
181,378 1,896,257 982,285 3,237,493 6,116,035 417,580,396 421,800,174
Oceania (12) 2,391 75,438 0 147,071 222,509 30,696,144 30,843,215
Grand Total
(156)
2,937,323 16,048,886 11,148,583 252,199,398 279,199,398 954,109,679 1,217,457,660
Source: Anthony Murray, 2017, ICA, 2017
Cooperative Societies in Zambia
As of 2018, Zambia had registered 1,901
cooperatives of which, 1827 are in agriculture,36
in financial, 25 in mining, 5 in artisans, 4 in
marketing, 1 in tourism, and 3 in transport. 12
cooperatives were further issued with
certificates of gold mining in the mining sector,
a clear indication of significant improvement
towards diversification of cooperatives to the
non-agricultural cooperatives from the
traditional agricultural-oriented cooperatives.
This is presented in Table 3.
4

5. Table 3. Registered Cooperatives as at December, 2018
Province Agricultural Non-agricultural Total
Central 151 7 158
Copperbelt 155 6 161
Eastern 468 19 487
Luapula 44 0 44
Lusaka 141 27 168
Muchinga 116 0 116
Northern 115 2 117
North-Western 45 4 49
Southern 525 5 530
Western 67 4 71
Total 1827 74 1901
Source: 2018 Annual Report, Ministry of Commerce, Trade and Industry (MCTI)
It is convincing that the agriculture
cooperatives in Zambia are more than all the
other categories of cooperatives put together,
which stand at only 4%. This is shown in figure
1.
Source: 2018 Annual Report, (MCTI)
Figure 1. Agriculture Cooperative Versus Non-Agriculture Cooperatives
Kenyan Perspective
Kenya started its cooperative journey in 1908.
As of 2017, the country has a total of 22,000
registered cooperatives with a membership of
over 14 million people. Co-operatives cut across
all sectors of the national economy such as
financial, agricultural, housing, transport,
among others, with a total asset base of over
Kshs. 800 billion; with mobilized savings in
excess of US$ 6.4 billion constituting over 48%
of national savings (IMF, World Bank Economic
Outlook 2014), which has significantly
contributed to the provision of affordable credit.
The salient challenges in the cooperative
sector include the high cost of finance in Kenya,
thereby making credit expensive. The
96%
4%
Comparative of cooperatives by percentage
Agricultural Coop
Non-Agricultural Coop
5

6. inadequate market access, indebtedness by co-
operative enterprises, particularly those engaged
in commodities and agricultural production,
inadequate research in emerging co-operative
products and services, low participation of the
youth, women, and people living with
disabilities, low adoption of ICT, and use of
manual (paper-based) operations, lack of
credible data and information and weak
governance in co-operatives.
Types of Cooperatives
There are different types of Cooperatives.
Discussed here are the seven types with regard
to their specialization.
Producer Cooperatives
These are groups of people engaged in the
agricultural fields of specialization like farming,
fishing or fish farming, and forestry.
Cooperative members may be farmers,
landowners, or owners of fishing operations.
They can cooperate by buying farm inputs,
equipment, and insurance, hiring managers and
sales people, marketing and advertising together,
or operate storage or processing facilities or a
distribution network.
Worker Cooperatives
These are firms owned by some or all of the
workers. They offer workers a chance to own
their own company or shares with very little
financial investment, depending on the start-up
capital needed. They are also becoming popular
with small groups of advocates, designers and
engineers, fundraisers, and various
professionals.
Consumer Cooperatives
These are firms owned and managed by
people who want to be buying from the
cooperative. Consumers can create a cooperative
to provide pretty much anything they want to be
buying. Their orders may include groceries,
electricity or telephone service, fuel, housing,
professional care, healthcare, legal services,
financial services, or under the label of credit
unions.
Credit unions
Credit unions are consumer-owned financial
services cooperatives in which every depositor
of a certain amount becomes a member-owner.
Members attend the annual general meetings and
have a vote on any elections convened by the
board of directors that is typically made up of
community volunteers. These have the mostly
considerable expertise in relevant fields.
Retail or Purchasing Cooperatives
This is a retail or purchasing cooperative, also
called a shared service cooperative. Most of
these cooperatives are owned and managed by
independent business owners. For example, the
Agriculture Cooperative Union and some
hardware stores are independently owned
businesses that have formed national and
international cooperatives to purchase goods and
services at rates that will keep their bottom lines
in murky. There are also many successful
smaller operations, such as a group of
independent business consultants or attorneys
who want to buy office supplies, insurance, or
other products and services together. What
unites all of these cooperatives is that they seek
to improve their efficiencies and market
competitiveness by bulk buying of goods and
services.
Housing Cooperatives
This type of cooperative is owned by the
residents, making them a type of consumer
cooperative. This can range from a single house
to apartment complexes with hundreds of units
and also includes co-housing projects, in which
dozens of homes are cooperatively owned.
Condominiums are a relative of cooperatives,
although, with condos, each member owns their
own unit; in a cooperative, each member owns a
share of the cooperative that owns all of the
property. A special type of housing cooperative
is a resident-owned community of manufactured
6

7. homes, in which residents own their homes and
own a share in the cooperative that owns the land
and runs the park.
Complex Cases and Multi-Stakeholder
Cooperatives
This is a hybrid among these types of
cooperatives mentioned above. They are called
“multi-stakeholder” cooperatives. Mostly, they
create specific roles and rights for several types
of members. For instance, this may take the form
of a credit union/producer or consumer/worker
hybrid cooperative. In these setups, the
membership fees might differ for the two groups.
This recognizes that there will likely be fewer
producer members and that they potentially have
more to gain and, therefore, more incentive to
invest. Many times, you may also have a number
of board seats reserved for each (for example, on
a board of seven, there are three open
memberships while two members will be elected
by the credit unions and two by the producers).
These types of cooperatives are more
multifaceted and may experience tension among
the various types of members.
Cooperatives and the MSMEs
The majority of the population in developing
countries depends on smallholder farming,
predominantly organized into cooperatives, for
their livelihood [6]. In spite of interventions
from the government and private institutions,
they have generally not performed well in
alleviating poverty and creating jobs. The
success of the cooperatives in developing
countries today largely depends on the use of
innovative business models. Many research
studies reveal that the changing consumer
buying habits favour product-oriented and not
production-oriented farmers. Hence farmers
need to see themselves as suppliers of consumer
products in an integrated national and world
food system. This calls for high levels of
entrepreneurship and innovation in cooperative
societies if they are to remain an economic tool
for poverty reduction. Entrepreneurial
agriculture Cooperatives need to run as Micro,
Small, and Medium Enterprises (MSMEs)
In developing countries, just like in developed
countries, the MSMEs sector is mostly
characterised by business activities of
enterprises. These have engaged in traditional
industrial sectors, primarily in the production of
goods and services for domestic consumption.
However, the primary objective of most of the
enterprise owners is to generate employment and
income for personal requirements [7]. From the
time the structural economic reforms were
introduced, like in Zambia that had a transition
to a liberalised economy in 1991, there has been
increased activity in the MSMEs sector. This is
also happening in many democratic countries in
Africa and other continents.
MSME business activities in developing
countries are largely in trading, simple
manufacturing, and service provision.
Manufactured products in the MSME sector
include textile products, wood products, light
engineering, and metal fabrication, food
processing, leather products, handicrafts, and
ceramics, to mention a few. Conversely, the
service sector comprises restaurants, hair salons
and barbershops, passenger and goods transport,
simple building construction,
telecommunication services, business centre
services, and cleaning services. Besides, the
trading sector is concentrated in consumable
products, industrial products, and agricultural
inputs and produce.
It is undisputable and a fact that is recognised
globally that MSMEs play an important role in
the economic development of many countries.
The aggregate contribution of MSMEs to
national development cannot be over looked.
According to UNDP [9], MSMEs have the
highest capital: employment ratio and are a
source of income for a broader layer of the
population. The development of MSMEs is
viewed as one sustainable way of reducing the
levels of poverty and improving the quality of
life of households through wealth and job
creation. The contribution of MSMEs to
7

8. employment, growth and sustainable
development is a widely acknowledged fact.
MSMEs provide one of the most productive
sources of employment and wealth creation and
are a breeding ground for industries as they cut
across all sectors of the country’s economy.
Most cooperative societies fall within the
MSMEs sector.
Cooperatives are a form of business that
benefits members, communities, and the nation
in various ways. These are businesses with a
minimum of ten members but no specific
maximum number of members; they are
voluntary businesses in nature formed by a
group of people called members whose aim is to
create employment for themselves. The Business
Enterprise Institute (BEI) describes cooperatives
as businesses owned by “member-owners,” and
that they are democratically controlled by their
member-owners, and unlike a traditional
business each member gets a voice on how the
business is run. Services or goods provided by
the cooperative benefit and serve the member-
owners.
Entrepreneurial Cooperatives: Creating
Value for Individuals and Society
The Australian economist, Kirzner, defines
entrepreneurship as the competitive behaviours
that drive the market process [10]. Essentially,
this definition focuses attention on both the
outcomes of entrepreneurship (what happens to
markets and to society in general) and the
process through which market change occurs
(what individuals specifically do). It is also a
perspective that emphasizes the discovery of
entrepreneurial opportunities, as opposed to the
creation of opportunities brought into existence
through the actions and sense-making of
entrepreneurial actors [11, 12]. The debate in
between is that of objective versus subjective
nature of opportunities which may be referred to
as weak and strong premises of
entrepreneurship, respectively [13].
Therefore, an entrepreneurial cooperative is
that type of cooperative that emerges as the
result of the entrepreneurship process, which
could either be a total new cooperative or the
transformation of an existing cooperative. This
calls for entrepreneurial management, which
involves the specific management behaviour that
entrepreneurs engage in to drive the market
process and produce innovation.
The Need for Cooperatives
Cooperatives offer farmers advantages that
are difficult to achieve working individually.
According to the Dunsany Group, a significant
and compelling evidence exists demonstrating
that cooperatives lead to a more democratized
economy and society at local, national, and
transnational levels apart from other benefits.
Well-functioning rural cooperatives and
farmers’ organizations play a key role in
empowering small agricultural producers [14]
The benefits of cooperatives include:
1. Farmers retain the governance of the
cooperative,
2. Cooperatives reach a large number of
beneficiaries and create networks of mutual
support and solidarity for their members
[15].
3. Farmers are able to collectively negotiate
better contract terms and prices [14].
4. Better access to a wide range of resources
and services [14].
5. Increased efficiency of smallholders and the
efficient use of available resources by
inspiring innovation, diversification and
specialization in their members’ businesses
(United States Department of Agriculture
[15].
6. Better access to markets [16].
7. Better access to financing,
8. Creation of productive employment [17].
9. Social integration, particularly for women,
youth, elderly and people with disabilities
[14, 18].
Cooperatives can also improve relations
between farmers and government, as the
government can better understand the particular
8

9. needs of groups in certain geographical areas or
businesses, and therefore channel their policies
to address those needs. In Israel, the partnership
between the Government and the cooperative
movement has been the cornerstone of their
economic and social development, while in
Panama, cooperatives are implementing plans
and employment programs that are consistent
with the strategies of the government for socio-
economic development [19]. Cooperatives also
contribute to local economies by spending
additional income earned by members in other
businesses, creating knock-on effects to the
broader economy [20, 21].
Agriculture in Developing Countries: A
Zambian Perspective
The agricultural sector in developing
countries offers the main support for the rural
economy, as evidenced by the fact that about
50% of the developing countries depend on
agriculture, primarily through small-scale
production for their livelihoods and employment
[25]. The sector contributes mostly above 8.5
percent to the GDP and approximately 10
percent of national export earnings in many
developing countries [25, 26].
Uniquely, Zambia is blessed with the natural
endowments to become the breadbasket of the
southern and central African region. Zambia can
perform wonders with over 750,000 km2 of
land, massive endowments in surface and sub-
surface water resources, and a population
density of just 19.24 people per km2. It is,
therefore, undisputable that as a developing
nation, growth in agricultural sector is the
clearest avenue through which sustainable
economic growth and poverty reduction can be
achieved in Zambia.
Agriculture in Zambia can be classified into
three categories. These are small holders,
medium and large-scale farming. The small
holders can further be classified into class A
which is the smallest with 0-2 hectares of land,
B are those cultivating 2-5 hectares of land, and
C, which consists of those that cultivate between
5-20 hectares of land. However, the medium and
large-scale farmers are just a small fraction of
the farming community, but they produce
various crops for both the local and international
markets.
Currently, Zambia’s agriculture GDP has,
over the years, been sustained at above 6%.
However, due to a myriad of factors, including a
reduction in production due to poor rainfall,
loading shedding, depreciation of the Kwacha,
rising in input prices, among others, Zambia’s
agricultural GDP and growth rate is likely to
drop to below 6%, below the CAADP targets.
Consequently, if appropriate measures are put in
place, such as appropriate investments,
conducive and stable agricultural policies are
implemented, and the business environment is
improved, Zambia has the potential to transform
its agricultural sector and perform above the
CAADP targets.
The trend of the annual budgetary allocations
to agriculture in Zambia is a matter of concern.
Its allocation in 2016 was 6.5 percent of the total
national budget, down from 9.5 percent in2015.
This is below the 10% CAADP’s target.
However, since 2003, nearly half of Zambia’s
budgetary allocation to agriculture has in fact,
surpassed the CAADP target. However, it is
important to note that this was not only peculiar
to the ministries of Agriculture, Fisheries, and
Livestock but other ministries as well due to a
reduction in the overall government budget.
Consequently, the target is reached if and when
supplementary funding to output price support
through the Food Reserve Agency (FRA) and
input subsidies via the Farmer Input Support
Program (FISP) is included in budgetary
allocation analysis.
Current rural poverty estimates show that
there has been a marginal decline in rural
poverty by 1.3 percent from 77.9 percent in 2010
to 76.6 percent in 2015 [25]. This is despite
heavy spending on FRA and FISP. Continued
heavy spending on FISP and FRA has left few
resources to invest in these well-recognized
drivers of agricultural growth. Zambia has a
9

10. primary policy objective of achieving
accelerated growth and competitiveness in the
agricultural sector. However, this can only be
achieved if adequate public resources are
committed to catalyzing the desired growth.
Moreover, farmers need also to adopt
simproved agricultural technology for an
economically efficient farm sector. This will
increase the financially viability of farmers
through improved production and productivity.
In this regard, technopreneurship is the possible
alternative.
Challenges Faced by Cooperatives in
Developing Countries
As already stated, most cooperatives in
Zambia fall in the MSME sector. Therefore,
many challenges that relate to the MSME sector
are identifiable to those challenges that are faced
by cooperatives. Past research and studies in the
MSME sector have brought to the fore
challenges faced by cooperatives in developing
countries, among them include; lack of finance
and limited access to suitable business financing
solutions, low level of financial education, high
interest on bank loans, limited access to
appropriate technology, lack of machinery and
equipment, and inadequate business
infrastructures such as roads and
telecommunication facilities. Other challenges
are limited technical and management skills,
inadequate and unsuitable operating premises to
facilitate enterprise growth and extreme
competition from unregulated importation of
cheap products.
The Role of Foreign Investment in
Agriculture Cooperatives
When operating as a business venture, it must
be envisaged that foreign investors can be
attracted to invest in the activities or businesses
of cooperatives. On the other hand, when the
cooperative reaches a certain maturity and size,
it can also become an investor. It is the first case
that provides an interesting example of how
governments can promote investment in
cooperatives as a tool for agricultural
development.
The central characteristic of successful
cooperatives is organization. This includes
organizing the interests of farmers or
entrepreneurs, ensuring a strong level of
participation of members, and finding the correct
management strategy. This is crucial to
attracting foreign investment. Well-organized
cooperatives upgrade the skills of their
members, offering investors a more
sophisticated and reliable market [27].
Cooperatives bring together dispersed
producers and entrepreneurs in the agriculture
sector to create economies of scale for their
members. They form interdependent units where
the output of one (seeds, chemicals, and
fertilizers, for example) is the input of another
(the farmer, for example). The cooperatives thus
provide reliable partners or suppliers for foreign
investors and growth prospects for the rural
economy. When analyzing the opportunities and
risks of investing in a country’s agricultural
sector, the presence of cooperatives in the
sector’s value chain lowers the perception of risk
for investors and reflects a stronger economy.
For example, when an investor invests in
agricultural production, the existence of seed
suppliers in a cooperative, or of processing
cooperatives, lowers the investor’s perception of
risk of seed shortages or of potential buyers for
the investor’s agricultural goods.
A recent World Bank and UN Conference on
Trade and Development (UNCTAD) of 39 large-
scale agricultural investment projects found
projects where investors had successfully
contracted without growers who were part of
cooperatives. Cooperatives were generally
encouraged by investors because they facilitated
the contract process and logistical arrangements
so that, instead of dealing with large numbers of
farmers, investors could deal with one
cooperative, which made the process easier to
manage. Those who are part of cooperatives are
10

11. particularly vocal about the advantageous access
to credit schemes, as well as the ability to get
better deals on agrochemicals and fertilizers and
sell their products to major buyers.
Furthermore, in working within a value chain
of cooperatives, foreign investors have
collaborated in upgrading members’ skills as
well as taking advantage of their local
integration to channel their efforts to help the
community as a whole. For example, Nestlé’s
International Cocoas Initiative project in the
Ivory Coast works with cooperatives to
minimize the risks of child labour [28].
Cooperatives can also create linkages to other
investment opportunities. In Zambia, for
example, a cooperative of farmers producing
sugarcane formed a partnership with a
processing company that gives farmers shares in
the company and representation on its board.
These inclusive investment models combine the
strengths of the investor, bringing capital,
technology, and expertise in management and
marketing with those of local farmers who
provide labour, land, traditional know-how, and
knowledge of local conditions.
Finally, there is also the opportunity of
investing in cooperatives. The investor can
become a member of the cooperative through its
local business. On the other hand, an investor
can also make a capital investment in a
cooperative. Many cooperatives, after reaching
economies of scale, have accepted the
investment of non-member capital, transforming
themselves from member organizations to
investor-driven enterprises. Generally, in this
situation, the investor has minimal or no voting
rights.
The Role of Governments in Cooperative
Development
The key success factor of the cooperatives is
in the drive and motivation of its members, i.e.,
their entrepreneurship and organizational ability
[29]. However, the government plays an
important supporting role in terms of providing
information and creating a sound legal
environment. But its involvement must be
limited and targeted to the needs of cooperatives
members should retain ownership and
management.
Experience shows that cooperatives created
from the bottom up, through initiatives in rural
areas, have been more successful than those
created through government programs. In
Nigeria and Tanzania, post-independence,
government food buying bodies bought all
cereals from cooperatives. However, following
liberalization policies in the late 1980s, these
bodies were disbanded, and most cooperatives
were unable to survive in the open market.
In the Iranian county of Marvdasht, one of the
reasons for the failure of cooperatives was the
strong interference of the government with little
involvement of farmers in decision-making.
Governments should confine their role to
registration, dissolution, and liquidation of
cooperatives and enforcement of cooperative
laws. They should avoid interfering in the
cooperative’s internal affairs [30]. The areas of
support include human resource development,
research and management consultancy,
accountancy and auditing, information
technology, laws and taxation, and relations with
the private sector. Education and training before
and after forming a cooperative is crucial for
farmers and entrepreneurs to make informed
decisions. The government should, however, be
providing the cooperative with an enabling
environment to pursue its objectives.
Canada and United States have stories of
profitable cooperatives because of government
subsidies to the sector. However, subsidies are
not a condition for success. For example, New
Zealand has a positive history in cooperatives
without government subsidies but with more
flexible legislation than other jurisdictions,
enabling innovation in cooperative design [31].
In addition, farmers in cooperatives still need
to access sufficient land, infrastructure,
affordable credit, information and networks in
order to succeed in business. Cooperative cannot
always cover these needs. The government and
11

12. financial sector play a key role in attending to
these problems. With tax incentives and
concessions, governments can encourage
particular investment, for example, in
innovation.
The Legal Frameworks make cooperatives
benefit from a flexible, cooperative law, single
taxation scheme, and clearly defined
competition rules [23]. These aims can be
achieved through different types of legislation.
Regulations consider international principles
and follow the current International Labour
Organisation (ILO) Guidelines for Cooperative
Legislation, UN Guidelines aimed at creating a
supportive environment for the development of
cooperatives, 2001, and the 5 principles of the
International Cooperative Alliance (ICA). In
South Africa, for example, national legislation is
strongly based on international principles of
cooperatives. Denmark and Ireland have
developed a large number of cooperatives
without using specific cooperative laws.
However, in general, a comprehensive law
provides greater legal security.
Another approach being used is to create
specific laws and codes on cooperatives; for
example, the Multi-State Cooperatives Act,
2002, of India, the Canada Cooperative Act,
2010, and the Cooperatives Code of the
Philippines. Most Latin American countries
have specific cooperative laws. Some have a
combination of laws like Argentina’s
Cooperatives Law (No. 20,337) and the Law for
the creation of an Education and Promotion
Fund for Cooperatives. One of the most recent
laws is the Cooperative Organizations Law in
Mexico (2012) that now exempts cooperatives
from commercial laws, protects new labour
rights, and prevents the use of cooperatives to
evade social, labour, and tax obligations.
At the regional level, European Union
Regulation 1435/2003 on the Statute for a
European Cooperative Society came into force
as applicable to all member States in 2006,
creating a new type of cooperative. These cross-
border cooperatives need at least two EU
member countries and make reference to
national cooperatives laws. In South America,
the Mercosur Common Cooperative Statute
follows the same path [32]. In Latin America, the
Framework Law for Cooperatives in Latin
America 2009 has been created as a guide for
policy-makers.
Whichever form the law takes, it needs to be
clear about the process for becoming
incorporated and registered as a cooperative (in
order to give confidence to those doing business
with them) as well as the process for liquidation
and dissolution. At the same time, legislation
should be flexible enough to allow cooperatives
to organize and work in an autonomous manner
and to accommodate different sizes of
cooperatives. Italy and Cameroon, for example,
have strong laws to regulate large cooperatives
but which allow for simplified procedures for
small ones.
Regarding processes around drafting
legislation, participation and consultation of
cooperatives is essential. For example, notes
from the Canadian government in 1996, indicate
that the federal cooperative law of Canada was
enacted after extensive nationwide consultation.
In Zambia, the cooperative registration
supervision was initially the responsibility of
Agriculture until 2015, when it was taken to the
Ministry of Commerce, Trade and Industry. This
was meant to bring the needed realization that
cooperatives are a form of legal business and can
operative under a business model. This requires
that cooperatives need to undergo the same
registration procedures just like any business in
developed and developing countries [33].
Results
The findings of the study real that areas of
cooperative Registration process and
requirements are not adequately addressed by
the existing literature. These are also not
adequately addressed or made uniformed by the
International Cooperative Alliance. Each
country has its own requirements and process.
12

13. However, the study reveals that many
developing countries include the following;
1. The By-Laws.
2. Minutes of the first meeting suggesting to
form the cooperative society.
3. Membership of between 5 to 10 members as
a requirement for cooperative registration.
4. List of members and their national
identifications.
5. The application forms.
6. The business plan (this was option in many
countries).
7. The strategic plan (this was option in many
countries).
However, many cooperative societies are
hurried organised due to political influence and
fail to perform and play a critical role in poverty
mitigation.
In general, the study reveals that cooperatives
are generally saving many lives and strongly
alleviating the poverty levels in many
developing countries. The International
Cooperative Alliance recommends that every
country needs to be submitting statistics of the
economic impact the cooperatives are making in
each country. However, many countries do not
submit, making the quantification of the
economic contribution quite difficult.
Economic Contribution of the
Cooperatives
Despite the agriculture cooperative being
second to industry and service cooperatives in
terms of quantities and number of employees,
they contributed a bigger portion of 39.34 billion
British Pounds towards the total annual turnover,
only second to consumer cooperatives. With
supportive strategic goals, cooperatives can be
one of the solutions to help the less privileged in
society and help reduce the gap between the
wealth and the poor. This is evidenced by the
overwhelming rate of the annual turnover of
424.99 billion British Pounds in European
cooperatives. Europe as a continent has over
180,000 cooperative enterprises with more than
140 million cooperators. Table 2 shows the
European annual turnover of the cooperatives by
sector.
Table 3. Economic Contribution of the Cooperatives
Sector Percentage of coops Percentage by employees Annual turn over
Agriculture 30.36% (51,392) 14.16% 39.34 billion
Industry & service 36.60% (61,964) 27.53% (1,313,696) 9.65 billion
Housing &infrastructure 22.19% (37,570) 2.29% 2.51 billion
Banking 2.48% 19% (867,345) -
Insurance 0.01% 0.83% 6.69 billion
Consumer 6.82% 11% 102.6 billion
Pharmacy 0.45% 0.06% 0.09 billion
Renewable energy 0.74% 0.02% 0.11 billion
Retail 22.19% 24% (1,142,658) 264 billion
Total 100% 424.99 billion pounds
Source: International Cooperative Alliance (2016)
At the global level, entrepreneurial
cooperative societies play a critical role in the
agriculture sector and contribute positively to the
social and economic development of the nation.
For example, in Denmark’s agriculture sector,
Danish farmers successfully responded to
international trade dilemmas using cooperatives
that innovatively transitioned grain production
to livestock production and now supply butter
and bacon for overseas markets.
In El Salvador, cooperatives innovatively
participate in the coffee market and are agents of
local development in providing their members
13

14. more than economic benefits, contributing to the
basic needs of the community.
In the United States, a South Dakota soybean
farmers’ cooperative opened a processing plant
to add value to their production. This is being
entrepreneurial. A Missouri corn growers’
cooperative was able to enter the ethanol
business. Further, An Iowa Farmers’
Cooperative improved their methods of pork
production to become financially profitable. All
these innovative cooperatives are adding value
to the economic development of the nation [22],
[23].
In India, after independent, milk procurement
and marketing in urban areas was a problem.
Producers in Kaira went on strike against their
milk procurer and formed a cooperative, which
transformed into a model known as AMUL. The
AMUL model is a three-tiered structure with a
village-level cooperative, a district-level union,
and a state-level federation that ensures a direct
link from the producers to the consumers with
producers controlling procurement instead of
middlemen. This model organized milk
marketing in India and has improved not only the
business of producers but also the quality of milk
arriving to consumers.
In Kenya, Githunguri Dairy Cooperative
Society has survived a series of liberalization
measures and was able to continue attracting
finance. This is a farmer´s association that was
established in 1961.Its Management training,
business plans, education and outreach,
innovation as well as good farming practices
made the difference. In 2008, the cooperative
joined the top three milk processors in Kenya,
and a savings and credit cooperative were
established to ease financial management [23].
In Malawi, the Malawi Lake Basin Program
consists of a consortium of the Farmers’ Union
of Malawi (FUM), the Malawi Union of Savings
and Credit Cooperatives (MUSCCO), National
Smallholder Farmers’ Association of Malawi
(NASFAM), and the Swedish Cooperative
Centre. Each organization has one vote in the
board and brings its specific experience to the
program, including agriculture, financial
services, marketing, and organizational. The
program has been innovative in its approach to
poverty reduction in Malawi, and it is
contributing positively to economic
development [6].
Finally, in Zambia, the Organic Producers and
Processors Association of Zambia (OPPAZ)
contributed to poverty alleviation among
smallholder organic farmers by raising their
incomes through the premium generated from
the sale of organic products. These results
partially came from farmers in the cooperative
adopting organic farming technologies with
production volumes sharply increasing for most
organic products. Through their innovation,
many farmers improved the quality of
production and gained organic certifications.
Agricultural cooperatives have always played
a fundamental role in the development of the
rural sector and in promoting food security. This
is evidenced by the Food and Agriculture
Organisation [15], which indicates that in Brazil,
37 percent of agricultural gross domestic product
(GDP) is produced through cooperatives.
Besides, in Egypt, 4 million farmers earn their
income through cooperative membership, and
the equivalent figure is 900,000in Ethiopia. In
India, 16.5 million litres of milk are collected
every day from 12 million farmers in dairy
cooperatives, while in Europe, agricultural
cooperatives have an overall market share of
about 60 percent. These include the processing
and marketing of agricultural commodities and
about 50 percent of the supply of inputs” [24].
Discussion
Studies reveal that agricultural cooperatives
impressively contribute to poverty reduction by
offering an inclusive and democratic avenue for
economic growth. Cooperative societies are key
economic players for improving food security.
The challenge is to build self-reliant
organizations that operate efficiently within a
market economy and contribute to improving
incomes, creating employment opportunities,
14

15. integrating small producers, and facilitating
cooperatives to operate under a business model.
The central characteristic of cooperative
organization is crucial in attracting foreign
investment. Foreign investments give the
desirable competitive edge to agriculture
cooperatives, boost their capital and bring the
much-needed skill sets to the entire cooperative
management. Clustering smallholder farmers
and agriculture entrepreneurs and improving
their capacities offer investors a more refined
and reliable market to invest in. Therefore,
appropriate policy and legal frameworks need to
be considered for successful agricultural
cooperatives. The government can act as a
promoter and facilitator by generating policies
and programs to support cooperatives, develop
adequate infrastructure and social services, and
eliminate any barriers to cooperative
development. Further, entrepreneurship training,
financial controls, as well as enhancing
management skills, communication with the
Board, and general membership can help propel
cooperatives to greater heights which will
eventually reduce the poverty levels in
developing countries.
Conclusion
The cooperative society is as good as its
registration process. Every member of the
community has a role to play in its well-being.
In the same line, every cooperative is born with
a role to play in alleviating the poverty levels and
add a distinguished value to the general well-
being of the members and the nation at large.
This common understanding must be
fundamental from cooperative registration to
evaluation. These must centre on
entrepreneurship and innovation. Cooperatives
must greatly contribute to poverty reduction and
demonstrated some notable levels of
entrepreneurship and innovation. Foreign
investment is slowly coming in, but more
promotions can help a lot and supplement the
governments’ efforts in improving the well-
being of the agriculture cooperative societies.
However, cooperative societies remain more
united associations in alleviating the poverty
levels in rural areas and contributing
exceptionally to the social and economic
development of the nations.
The study recommends that governments
should be encouraged to be open and publish the
statistics of agriculture cooperatives and the
impact they are making in alleviating the poverty
levels and social and economic contributions.
Policies should be developed with careful
consideration of all the stakeholders and should
attract foreign investments. However, the
government plays an important supporting role
in terms of providing information and creating a
sound legal environment, but its involvement
must be limited and targeted to the needs of
cooperatives while members retain full
ownership and management of the cooperatives.
Acknowledgement
In this article, I would like to acknowledge the
Ministry of Commerce, Trade and Industry, the
Cooperative department, Zambia Library, the
Cooperative College, and Chalimbana
University for their literature and technological
support. Gratitude also goes to all the referees
used in the paper.
Conflict of Interest
It is important to disclose any conflict of
interest that may have influenced either the
conduct or the presentation of this paper,
including academic interests and rivalries and
any personal, religious, or political convictions
relevant to the topic at hand. The study basically
reviewed the related literature on the topic at
hand using secondary sources. The study took
the neutral step, and the researcher
acknowledged the works used in the study and
presents the findings without any biases.
15

16. References
[1] Ministry of Commerce, Trade, and Industry
(2018). Cooperative’s development. Annual Report.
[2] Siame, M., (2016). Performance of Zambia's
Cooperatives, A Case Study of Kabwe, Lusaka &
Kafue Based Cooperatives. Mulungushi University.
https://www.researchgate.net/publication/324954678
_.
[3] Jeanne, B. (1993). No practice, no improvement:
A true story. https://doi.org/10.1002/pfi.4170320110.
[4] Pekka, H., et al. (1993). The development of
cooperatives and other rural organisations, the role of
the World Bank, World Bank Technical papers
number 199, Africa technical department series. The
World Bank, Washington, D.C.
[5] Moses, O. G. (2013). An Investigation of the
Impact of Co-Operative Movement in Rural
Development in Kenya. International journal of
business and commerce, Vol. 3, No. 2.
[6] OECD/ILO, 2019, Informality and Poverty in
Zambia: Findings from the 2015 Living Standards
and Monitoring Survey, ILO, Geneva/OECD
Publishing, Paris,
https://doi.org/10.1787/9789264310117-en.
Retrieved in 2019.
[7] Hannah Snyder (2019). Literature review as a
research methodology: An overview and guidelines,
Journal of Business Research, Volume 104,
November 2019, Pages 333-339, ISSN 0148-2963.
[8] Dean, T., Sarason, Y., and Dillard, J. F. (2006).
Entrepreneurship as the nexus of individual and
opportunity: A structuration view, journal of business
venturing, 21(1).
[9] World Bank, 1986; The World Bank annual report
1986, Washington, DC. © World Bank.
https://documents.worldbank.org/en/publication/doc
uments-
reports/documentdetail/992001468740700461/the-
world-bank-annual-report-1986.
[10]UNDP, 2004; Annual Report.
https://www.undp.org/content/undp/en/home/library
page/corporate/undp_in_action_2004.html.
[11]Kirzner, I. M. (1973). Competition and
entrepreneurship, University Chicago Press.
[12]Mole, F. K., and Mole, M., 2010;
Entrepreneurship as the structuration of individual
and opportunity: A response using a critical realist
perspective: Comment on Sarason, Dean, and Dillard,
Journal of Business Venturing, Volume 25, Issue 2,
230-237.
[13]Sarason, Y., Dean, T., and Dillard, J. F. (2006).
Entrepreneurship as the nexus of individual and
opportunity: A structuration view, journal of business
venturing, 21(1).
[14]Dimov, D. (2011). Grappling with the
unbearable illusiveness of entrepreneurial
opportunities, Entrepreneurship theory, and practice,
Vol 35(1).
[15]Sarasvathy, S. D. (2008). Effectuation, Edward
Elgar.
[16]David Stokes and Nick Wilson (2017). Small
business management and entrepreneurship. Cengage
Learning EMEA, UK.
[17]FAO, 2013, The state of food and agriculture
2013. http://www.fao.org/3/i3300e/i3300e00.htm.
[18]International Co-operative Alliance (ACI), 2013,
Cooperative identity, values & principles.
https://www.ica.coop/en/cooperatives/cooperative-
identity.
[19]USDA, 1990; Dietary Guidelines 1990.
https://www.fns.usda.gov/dietary-guidelines-1990.
[20]ILO, 2015, Cooperatives and Sustainable
Development: Analysis of Cooperative Voices and
Sustainable Development Survey Report, A
Contribution to the Post-2015 Development Debate.
[21]The University of Wisconsin Centre for
Cooperat, 1995; The role of cooperative societies in
economic development
https://uwcc.wisc.edu/resources/.
[22]Ntalasha, R. (2016). Developing Cooperatives in
Zambia, retrieved on 25th
February from
http://www.daily-mail.co.zm/developing-
Cooperatives-in-zambia/.
[23]UN General Assembly Economic and Social
Council, 2001, Poverty and the International
Covenant on Economic, Social and Cultural Rights:
statement/adopted by the Committee on Economic,
Social and Cultural Rights, UN. Committee on
Economic, Social and Cultural Rights (25th sess.:
2001: Geneva).
[24]IICA – World Bank, 1993; Moving out of
poverty in North East Brazil, IBRD Results, 91659.
16

17. htps://documents1.worldbank.org/curated/en/869521
468224087526/pdf/916590BRI0Box30ion04020010
00Public0.pdf.
[25]European Commission (EU), 2012; Fiscal
Sustainability Report, Economic and Financial
Affairs.
https://ec.europa.eu/economy_finance/publications/e
uropean_economy/2012/pdf/ee-2012-8_en.pdf.
[26]CSO, 2015; 2015 Living conditions monitoring
survey report (LCMS), Republic of Zambia Central
Statistical Office. CSO - Serving Your Data Needs.
https://www.zamstats.gov.zm/phocadownload/Livin
g_Conditions/2015%20Living%20Conditions%20M
onitoring%20Survey%20Report.pdf.
[27]World Bank, 2016; The World Bank Annual
Report 2016. Washington, DC. © World Bank.
https://openknowledge.worldbank.org/handle/10986/
24985 License: CC BY-NC-ND 3.0 IGO.
[28]International Co-operative Alliance (ACI),
(2017), Cooperative identity, values & principles.
https://www.ica.coop/en/cooperatives/cooperative-
identity.
[29]International Cocoa Initiative, 2014, The
International Cocoa Initiative Strategy, Putting the
future of children at the heart of cocoa sustainability.
https://cocoainitiative.org/wpcontent/uploads/2016/0
3/ICI_strategy_EN_digital_pxp.pdf.
[30]ILO, 2001; ILO's World Employment Report
2001: Despite Improved Employment Outlook,
Digital Divide Looms Large.
https://www.ilo.org/global/about-the-
ilo/newsroom/news/WCMS_007830/lang--
en/index.htm.
[31]Marina, R. (2014). Inclusive Investment in
Agriculture: Cooperatives and the role of foreign
investment, international institute of sustainable
development, Investment in Agriculture, Policy brief
No. 2.
[32]Leonard, O. B. (2018). The Challenges Facing
Cooperative Societies in Kenya A Case Study: Kenya
Planter Cooperative Union (KPCU) retrieved on 25th
February from
https://iiste.org/Journals/index.php/PPAR/article/vie
w/8743.
[33]Ministry of Commerce, Trade and Industry
(2019). Cooperative’s development. Annual Report.
[34]World Cooperative Monitor (2019). Exploring
the Cooperative Economy, Report, 2019. Euricse.
17